Planning practices fear breach reporting
Fear is stopping financial planning organisations from notifying the corporate regulator of breaches in their business rather than poor culture, according to legal advisory firm The Fold.
The company's managing director Claire Wivell Plater said a lot of businesses have a rule that they cannot report breaches to the Australian Securities and Investments Commission (ASIC) until it has been considered by either the directors or the external lawyer.
"The regulator has identified that some businesses think that if they report breaches ASIC is going to come through and shut them down. It's like dobbing themselves in," Wivell Plater said.
"It's almost like that sort of fear is indicative of poor compliance culture."
"It defeats the purpose if you don't report within that time period because failing to report a breach in that period is actually another breach."
She said her firm takes a middle-man position, where they get their clients to report breaches as fast as possible to give ASIC a preliminary indication of what action the company will take to address it.
"We find that if ASIC is already comfortable that you're working on the breach and you know what you're going to do to address it they tend to give you then the opportunity to do that," she said.
ASIC's deputy chairman Peter Kell recently warned financial planning organisations against poor culture and pushed for remuneration incentives to be based on good culture instead of sales.
It came as ASIC launched a crackdown on breach reporting and high-risk licensees, who may then face action.
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
